author of Sudden Money: Managing a Financial Windfall, says that one challenge of newfound wealth is dealing with all the emotional issues surrounding money — including other peopleâ€™s unrealistic expectations.
“Almost everybody looks at the issue of sudden wealth and thinks, â€˜Yeah thatâ€™s a problem Iâ€™d like to have,â€™” says Bradley. “Thereâ€™s a great American myth that says â€˜Money is good and more money is better.â€™ But the truth is that money is complex. Whether itâ€™s good or bad is determined by the individual, not by the event, or even the amount.”
Ilyas Akbar, a financial consultant and CPA at AXA Advisors in New York City, believes that Plumpp and Simmons have done themselves and their families a good service by enlisting the help of competent professionals.
“Sometimes I hear stories about people whoâ€™ve come into money and say, â€˜Iâ€™m going to take care of it myselfâ€™ or â€˜Iâ€™m going to just put it in the bank,â€™ but I think thatâ€™s a big mistake,” says Akbar. “It almost goes without saying, but when you experience sudden wealth, you really do need to get professional financial help.”
Thatâ€™s sound advice that DeAnna Whitsitt wishes she had taken a year ago. In October 2005, the Fort Washington, Maryland, resident came into a windfall of her own: nearly $76,000 from selling property interests. Today, Whitsitt looks back and wonders where most of the money went.
She can point to several major expenditures, like the 2004 Kia Sorrento she bought for roughly $15,800. She also recalls paying off nearly $30,000 in debt and spending about $6,000 to pay half the tuition to the school her two young daughters attend. But now Whitsitt, who still has about $10,000 in debt, says she is kicking herself for not paying off all her credit card bills. She also regrets not having paid her childrenâ€™s entire tuition, especially since the second half is due in January.
Instead of spending conservatively, Whitsitt says she did some impulse buying. For example, she once purchased 20 pairs of shoes on eBay, at prices ranging from $29.99 to $49.99, and took her daughters with her to get manicures and pedicures. “People were saying: â€˜Oh, you have money to blow,â€™” says Whitsitt. “I saw it as a special treat not only for myself but for my girls as well.”
Whitsitt also acknowledges taking her daughters on vacation to Myrtle Beach, South Carolina, and showering them and other relatives with gifts last Christmas. “I definitely splurged. It wasnâ€™t anything major, but it was a lot of things that added up.” Whitsitt recalls spending about $2,000 during the holidays, when she normally keeps it around $800 or so. “It was as if I was giving myself permission to spend,” she says of handling her windfall.
Making matters worse, her boyfriend, the father of her daughters, now thinks sheâ€™s hanging on to a big chunk of money, when in reality those funds have been spent. Whitsitt had put $15,000 into two online savings accounts, but little by little she tapped into them. Sheâ€™s afraid